From the Hotline: HSA Expenses and Reimbursement

April 20th, 2015

Question: If an employee incurs a qualified medical expense in 2015 which he pays for out of pocket, can he use 2016 health savings account (HSA) funds to gain reimbursement?

Answer: Yes, he may use 2016 HSA funds to be reimbursed for a 2015 health expense, as long as the qualified medical expense was incurred after the HSA was established. Unlike a health flexible spending account (FSA), there is no timeline requirement for when a HSA reimbursement must occur, as long as the expenses occur after the HSA was established or opened. However, an eligible individual should keep records sufficient to later prove that the distributions were used to pay qualified medical expenses which were not previously paid or reimbursed from another source. Additionally, these amounts may not have been taken as itemized deductions on prior taxable years.